In an unprecedented move, an institution of the Farm Credit System (FCS) -- a government-sponsored enterprise -- initiated procedures on July 30, 2004, to leave the FCS and be purchased by a private company. But after much controversy, including congressional hearings, the board of directors of Farm Credit Services of America (FCSA) voted on October 19, 2004, to terminate its agreement with Rabobank before seeking approval from the Farm Credit Administration, the System's federal regulator.

FCSA is the FCS lending association serving Iowa, Nebraska, South Dakota, and Wyoming. Rabobank is a private Dutch banking company with extensive experience in agriculture and a growing global network. Under the plan, the loans, facilities, and employees of FCSA would have become part of Rabobank, and new FCS charters would have been issued to reestablish a System presence in the four-state region.

The option to leave the System is allowed by statute under the Farm Credit Act of 1971, as amended, but has been exercised only once, and did not involve an outside purchaser. Although Congress had no direct statutory role in the approval process, the House held hearings on the implications of the deal, and Senators Daschle and Johnson introduced S. 2851 to require public hearings and a longer approval process. This report will not be updated.